Private tutors and coaches have less than a month left to notify HM Revenue & Customs (HMRC) that they might owe additional tax. (See also our previous TaxationWeb article Teacher, Tutor, Soldier, Spy - Ed).

They were offered a special tax plan ─ the Tax Catch Up Plan ─ in October this year. Registering by 6 January 2012 ensures that tutors and coaches don’t lose out on the best terms to disclose and pay what is owed.

The Tax Catch Up Plan is for people providing tuition or coaching, regardless of whether they have a registered qualification. It is aimed at those who profit from tuition and coaching as a main or secondary income, on which the correct tax has not been paid.

The opportunity is available to people teaching traditional academic subjects, fitness and dance, musical instruments, art, life coaching, personal training and other instruction.

After 6 January 2012, using information pulled together from different sources, HMRC will investigate those who have chosen not to come forward.

Marian Wilson, Head of HMRC Campaigns, said:

“Tutors and coaches who have notified us of their intention to disclose unpaid tax will have until 31 March to tell us what they owe and make arrangements to pay.

From January we will use the information at our disposal to investigate tutors and coaches who have not declared their full income. I therefore strongly urge anyone in this group who thinks they may have outstanding income tax liabilities to get in touch with HMRC and get their tax affairs in order.

 This is the first step for those with undisclosed income or gains to avoid a full tax investigation and much higher penalties. Contact us before we contact you.”

  The Tax Catch Up Plan has two stages:

1. By 6 January 2012, tutors/coaches/instructors must register with HMRC to “notify” that they plan to make a voluntary tax disclosure. 
2. By 31 March 2012,those who have registered to notify must tell HMRC what they owe and pay the tax, interest and penalties due.

People can register online by completing a notification form ­─ Tell HMRC Now About Your Income from Tuition and Coaching ­─ or by calling HMRC on 0845 601 8817. A dedicated team is ready to help, Monday to Friday, 08:00 until 19:30.

Introduction

Employers play a vital role in the operation of PAYE by sending in their annual PAYE returns to HM Revenue & Customs (HMRC), providing details of employees’ tax and National Insurance contributions. However in our experience these returns are not always accurate.

Employer returns for 2009/10 revealed the following incorrect information:

• 128 staff entered as Mr, Ms or Mrs ‘Dummy’;
• 572 people whose surnames only included the letter X, ranging from Mr X to Mrs XXXXXX;
• 75 staff with the surname ‘Casual’;
• 11 with the surname ‘Cleaners’;
• 9 with the surname ‘Workers;
• 6 with the surname ‘Students’ and
• 824 employees with the surname ‘Unknown’.

In addition, 40 people were apparently over 200 years old, after incorrect dates of birth were submitted.

Why Does This Matter?

Inaccurate PAYE returns can cause problems for employees resulting in the wrong amounts being deducted from their pay. PAYE errors also mean that employers and HMRC spend valuable time and money putting them right.

How can Employers get PAYE Returns Right First Time?

Around 80% of errors in employee data are due to an incorrect name, date of birth or National Insurance number. This is straightforward information that can be collected and checked quite easily.
 
Here are four practical tips to help employers ensure PAYE returns are accurate before submitting them:

1. Name – Always provide your employee’s full first name and not just their initials. This is particularly important for common surnames. Make sure that their first name and surname are in the correct order. Check that you have spelt the names correctly. For example, enter John Smith and not J Smith or Smith J. Include a middle name if the person has one, e.g., John Michael Smith. Simply putting an initial, such as J Smith, makes it difficult to trace the correct account.  Check that you have spelt the name right, e.g., Smith and not Smyth.
2. Date of Birth – Always provide your employee’s correct date of birth. Do not enter a default date or invent a date of birth. Enter the day, month and full year of birth, for example: 05/05/1985.
3. NI Number – Always enter your employee’s correct National Insurance number. Do not make up a number, or use a default number or use someone else’s. An employee’s National Insurance number must begin with 2 letters, followed by 6 numbers and end with a letter which will be either A, B, C or D. Employers can trace an employee’s NI number by using Form CA6855 which can be downloaded from HMRC’s website at CA6855 - Employees' National Insurance Number Trace
4. Verification – Wherever possible, check the information you need from an official source such as HMRC/Department for Work & Pensions/Passport documentation. Check the individual’s birth certificate or passport if possible to ensure that you have the correct name and date of birth.

More information on getting your PAYE data right is available at: Employee Information - Getting it Right